[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5271 Introduced in House (IH)]
103d CONGRESS
2d Session
H. R. 5271
To amend the Small Business Act to make modifications to the small
business and capital ownership development program, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 7, 1994
Mr. Mfume (for himself, Mr. Conyers, Mr. Flake, Ms. Roybal-Allard, Ms.
Velazquez, and Mr. Tucker) introduced the following bill; which was
referred to the Committee on Small Business
_______________________________________________________________________
A BILL
To amend the Small Business Act to make modifications to the small
business and capital ownership development program, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Minority Enterprise Development Act
of 1994''.
TITLE I--AMENDMENTS TO MINORITY SMALL BUSINESS AND CAPITAL OWNERSHIP
DEVELOPMENT PROGRAM
SEC. 101. MINORITY ENTERPRISE DEVELOPMENT PROGRAM.
(a) Establishment.--Section 7(j)(10) of the Small Business Act (15
U.S.C. 636(j)(10)) is amended--
(1) by striking ``(10) There is established'' and all that
follows before subparagraph (A) and inserting the following:
``(10)(A) There is established within the Administration a Minority
Enterprise Development Program (hereinafter in this subsection referred
to as the `Program'), which shall be administered by the Associate
Administrator for Minority Enterprise Development in accordance with
this paragraph and section 8(a).'';
(2) by striking subparagraph (B); and
(3) by striking ``(A) The Program'' and inserting ``(B) The
Program''.
(b) Assistance Under the Program.--Section 7(j)(10)(B)(i) of the
Small Business Act, as redesignated by subsection (a) of this section,
is amended by inserting ``Phase III of'' after ``small business
concerns participating in''.
(c) Conforming Amendments.--The Small Business Act (15 U.S.C. 601
et seq.) is amended by striking ``Minority Small Business and Capital
Ownership Development'' and inserting ``Minority Enterprise
Development'' each place it appears in sections 7(j)(10)(G),
7(j)(11)(A), 7(j)(11)(E), 7(j)(11)(H), 7(j)(11)(I),
8(a)(18)(C)(ii)(III), and 8(a)(20)(B).
SEC. 102. GRANDFATHERING PROVISION.
Section 7(j)(10(C) of the Small Business Act (15 U.S.C.
636(j)(10)(C)) is amended to read as follows:
``(C) A small business concern participating in any program
or activity conducted under the authority of this paragraph or
eligible for the award of contracts pursuant to section 8(a) on
the date of the enactment of the Minority Enterprise
Development Act of 1994 shall be permitted continued
participation in Phase III of the Program for the remaining
period of its original program term. Any such firm that has not
been awarded a contract pursuant to section 8(a) may elect to
suspend its participation in Phase III in order to participate
in Phase II. Upon the award of a contract pursuant to section
8(a) or the completion of a development agreement, the
suspension of time for participation in Phase III shall
cease.''.
SEC. 103. BUSINESS PLAN.
Section 7(j)(10)(D) of the Small Business Act (15 U.S.C.
636(j)(10)(D)) is amended--
(1) in clause (i), by inserting ``Phase III'' after
``Promptly after'';
(2) in clause (ii), by striking ``The plans'' in the matter
preceding subclause (I) and inserting ``The business plans'';
(3) by amending clause (iii)(IV) to read as follows:
``(IV) A transition management plan
outlining specific steps to enhance the
prospect of profitable business operations
after the expiration of the 9-year Phase III
program term specified in paragraph (15).'';
(4) in clause (iii)--
(A) in the first sentence by striking ``Each
Program Participant'' and inserting ``Each Phase III
Program Participant''; and
(B) in the forth sentence by striking ``the
transitional stage'' and inserting ``Phase III''; and
(5) in clause (iv), by striking ``Each Program
Participant'' and inserting ``Each Phase III Program
Participant''.
SEC. 104. USE OF CONTRACT SUPPORT LEVELS.
Section 7(j)(10)(D) of the Small Business Act (15 U.S.C.
636(j)(10)(D)) is further amended by adding at the end the following
new clause:
``(v) The forecasts of overall business activity contained in the
business plan of a Program Participant or the estimate contained in the
section 8(a) contract support level of such firm shall not be used by
the Administration to make a determination that such firm is ineligible
for the award of a contract to be awarded pursuant to section 8(a).''.
SEC. 105. PHASE III REQUIREMENTS.
Section 7(j)(10)(I) of the Small Business Act (15 U.S.C.
636(j)(10)(I)) is amended--
(1) in clause (i), by striking ``During the developmental
stage of its participation in the Program,'' and inserting
``During its first 4 years of participation in Phase III of the
Program,'';
(2) in clause (ii), by striking ``During the transitional
stage of the Program'' and inserting ``During years 5 through 9
of its participation in Phase III of the Program,'';
(3) by amending clause (iii)(I) to read as follows:
``(I) establish business activity targets
applicable to Program Participants during the 5th year
and each succeeding year of the concern's participation
in Phase III which reflect a reasonably consistent
increase in contracts awarded other than pursuant to
section 8(a) and are expressed as a percentage of total
sales corresponding to the concern's fiscal year;'';
and
(4) in clause (iii)(IV) by inserting ``in Phase III of the
Program'' after ``performance''.
SEC. 106. IMPROVED STATUS PROTEST SYSTEM.
Section 7(j)(10)(J) of the Small Business Act (15 U.S.C.
636(j)(10)(J)) is amended by striking clause (ii) and inserting the
following new clauses:
``(ii) A protest may be brought regarding a self-
certification by a business concern regarding its status as a
small business concern owned and controlled by socially and
economically disadvantaged individuals by--
``(I) another person with a direct economic
interest in the award of the contract or subcontract
under which such business has allegedly made the false
certification regarding its status as a small business
concern owned and controlled by socially and
economically disadvantaged individuals;
``(II) a prime contractor receiving specific and
credible information that an actual or prospective
subcontractor or supplier has falsely certified its
status as a small business concern owned and controlled
by socially and economically disadvantaged individuals;
``(III) a contracting officer receiving a self-
certification regarding an actual or prospective
contractor's status, which such officer reasonably
believes to be false; or
``(IV) the Associate Administrator for Minority
Enterprise Development.
``(iii) The Office of Hearings and Appeals shall hear
appeals regarding the status of a concern as a small business
concern owned and controlled by socially and economically
disadvantaged individuals for purposes of any program or
activity conducted under section 8(d) or any other Federal law
that refers to such section for a definition of program
eligibility.
``(iv) A decision issued pursuant to clause (iii) shall--
``(I) be made available to all parties to the
proceeding;
``(II) be published in full text; and
``(III) include findings of fact and conclusions of
law, with specific reasons supporting such findings and
conclusions, on each material issue of fact and law of
decisional significance regarding the disposition of
the protest.
``(v) A decision issued pursuant to clause (iii) shall be
considered a final agency action, and shall be subject to
judicial review under section 553 of title 5, United States
Code.
``(vi) If a firm engages in a pattern of misrepresentations
regarding the status of the firm in violation of section
16(d)(1), the Administration or the aggrieved executive agency
shall initiate an action to impose an appropriate penalty under
section 16(d)(2).''.
SEC. 107. CONTINUED PROGRAM PARTICIPATION.
Section 7(j)(11)(D) of the Small Business Act (15 U.S.C.
636(j)(11)(D)) is amended to read as follows:
``(D)(i) A Program Participant shall remain eligible for
participation in the Program after a transfer of an ownership interest
in the firm if ownership and control (as required by section 8(a)(4))
is retained by the socially and economically disadvantaged individuals
upon whom Program eligibility is based.
``(ii) A Program Participant shall remain eligible for
participation in the Program after transfer of ownership and control
(as required by section 8(a)(4)) to individuals who are determined to
be socially and economically disadvantaged pursuant to section 8(a).
Unless graduated or terminated, the Program Participant shall be
eligible for a period of continued Program participation not to exceed
the period described in paragraph (15).
``(iii) A Program Participant that is a tribally owned corporation
may remain eligible for participation in the Program with other than a
Native American as the firm's chief executive officer (or chief
operating officer), if the governing body of the Indian tribe certifies
to the Administration that it was unable to hire a qualified Native
American after conducting a national recruitment for such an
individual.''.
SEC. 108. PROGRAM ADMISSION.
Section 7(j)(11)(F) of the Small Business Act (15 U.S.C.
636(j)(11)(F)) is amended to read as follows:
``(F) Subject to the provisions of section 8(a)(9), the Division
shall--
``(i) make recommendations on requests for reconsideration
of denied applications for entry into Phase III of the Program
to the Associate Administrator for Minority Enterprise
Development;
``(ii) make requests for the initiation of suspension,
termination, or graduation proceedings, as appropriate, to the
Associate Administrator for Minority Enterprise Development;
and
``(iii) implement such policy directives as may be issued
by the Associate Administrator for Minority Enterprise
Development pursuant to subparagraph (I) regarding, among other
things, the geographic distribution of concerns to be admitted
into the Program and the industrial makeup of such concerns.''.
SEC. 109. PROGRAM PHASES.
(a) Establishment.--Section 7(j)(12) of the Small Business Act (15
U.S.C. 636(j)(12)) is amended to read as follows:
``(12)(A) The Administration shall segment the Program into 3
phases: a startup phase, a developmental phase, and a section 8(a)
contracting phase, which shall be known as Phase I, Phase II, and Phase
III, respectively.
``(B) The startup phase of program participation shall be designed
to assist newly formed or forming concerns in overcoming their economic
disadvantage by providing such assistance as may be necessary and
appropriate to achieve a business foundation adequate for future
growth.
``(C) The developmental stage of program participation shall be
designed to assist the concern in its effort to overcome its economic
disadvantage by providing such assistance as may be necessary and
appropriate to access its markets and to strengthen its financial and
managerial skills.
``(D) The section 8(a) contracting stage of program participation
shall be designed to overcome, insofar as practicable, the remaining
elements of economic disadvantage, and to further develop the concern
towards economic viability.''.
(b) Maximum Period of Participation in Each Phase.--Section
7(j)(15) of the Small Business Act (15 U.S.C. 636(j)(15)) is amended to
read as follows:
``(15) An eligible small business concern may receive developmental
assistance under the Program for the following periods as measured from
the date of entry into the applicable phase of the Program--
``(A) not more than 2 years may be spent in Phase I of
program participation;
``(B) not more than 3 years may be spent in Phase II of
program participation; and
``(C) not more than 9 years may be spent in Phase III of
program participation.''.
SEC. 110. DEVELOPMENTAL ASSISTANCE AUTHORIZED FOR PROGRAM PARTICIPANTS.
Section 7(j)(13) of the Small Business Act (15 U.S.C. 636(j)) is
amended--
(1) in the matter preceding subparagraph (A), by striking
``during the stages of program participation specified in
paragraph 12'' and inserting ``during its term of participation
in the Program''; and
(2) by striking subparagraph (J).
SEC. 111. TEST PROGRAM FOR USE OF SURETY BOND WAIVERS.
Section 7(j)(13)(D) of the Small Business Act (15 U.S.C.
636(j)(13)(D)) is amended--
(1) by striking clauses (i) through (iii);
(2) by striking ``(D) A maximum'' and inserting ``(D)(i) A
maximum'';
(3) by striking ``, except that, such exemptions may be
granted under this subparagraph only if--'' and inserting a
period; and
(4) by adding at the end the following new clauses:
``(ii) The agency with contracting authority may,
upon the request of the Program Participant, grant an
exemption pursuant to clause (i), if--
``(I) the Program Participant provides
certification, in the form prescribed by the
Administration, that the firm was unable to
obtain the requisite bonding from corporate
surety bonding firms;
``(II) the Program Participant has provided
for the protection of persons furnishing
materials or labor under the contract by
arranging for--
``(aa) the direct disbursement of
funds owed to such persons by the
procuring agency or through an escrow
account provided by any bank the
deposits of which are insured by the
United States Government; or
``(bb) irrevocable letters of
credit (or other alternatives to surety
bonding acceptable to the procuring
agency); and
``(III) the award value of the contract for
which the exemption is being sought does not
exceed $1,000,000.
``(iii) The authority to grant an exemption under
clause (ii) shall cease to be effective on September
30, 1997.''.
SEC. 112. STRATEGIC ALLIANCES.
Section 7(j)(14) of the Small Business Act (15 U.S.C. 636(j)) is
amended to read as follows:
``(14)(A) Small business concerns that have completed the 9-year
Phase III program term specified in paragraph (15) (in this paragraph
referred to as a ``Program Graduate'') shall be authorized to assist
Phase III Program Participants, determined by the Administration to be
eligible for such assistance, to develop within the Program.
``(B) A Program Graduate may provide assistance to a Phase III
Program Participant under this paragraph--
``(i) by providing, among other things, managerial
assistance, technical assistance, and financial support; and
``(ii) by entering into subcontracts for the performance of
specific contracts awarded under section 8(a).
``(C) In determining the eligibility of a small business concern to
receive assistance or contracts under this subsection or section 8(a),
the Administration shall not take into account any assistance received
under this paragraph from a Program Graduate.''.
SEC. 113. BUSINESS LOANS.
Section 7(a)(20)(B)(ii) of the Small Business Act (15 U.S.C.
636(a)(20)(B)(ii)) is amended by striking ``be not less than 85 per
centum'' and inserting ``not exceed 95 percent of the balance of the
financing outstanding at the time of disbursement where the purpose of
the financing is to finance government contracts, and shall not exceed
90 percent of the balance of the financing outstanding at the time of
disbursement where the purpose of the financing is for general working
capital as a line of credit''.
TITLE II--AMENDMENTS TO CONTRACTING PROGRAM
SEC. 201. CONTRACT AWARD PROCEDURES.
Section 8(a)(1) of the Small Business Act (15 U.S.C. 637(a)(1)) is
amended by striking ``(a)(1) It shall be the duty'' and all that
follows through subparagraph (D) and inserting the following:
``(a)(1)(A) The Administration shall seek the establishment of
contract goals under section 15(g) which will assure that contracts
sufficient to satisfy the contract support levels identified by
participants in the Minority Enterprise Development Program established
by section 7(j)(10) are designated by the various Federal agencies for
award pursuant to this subsection.
``(B) Except as provided in subparagraph (D), the Administration
may enter into prime contracts with procuring agencies and subcontract
performance of such contracts to qualified Phase III Program
Participants on a sole-source basis or may delegate to procuring
agencies under such conditions as the Administration considers
appropriate the authority to enter into sole-source contracts with
Phase III Program Participants. In any case in which the Administration
accepts a requirement for potential award pursuant to this subsection
and determines that a particular Phase III Program Participant is
eligible for and responsible to perform such contract, the procuring
agency contracting officer shall be authorized in the officer's
discretion to let the procurement contract upon such terms and
conditions as may be agreed upon between the procuring agency
contracting officer and the Program Participant.
``(C)(i) The Administration shall determine the eligibility of the
Program Participant to receive the award in accordance with the
eligibility criteria listed in paragraph (16).
``(ii) With respect to an individual contracting opportunity, the
Administration may provide, upon a request by the Program Participant,
assistance with respect to--
``(I) the negotiation of the terms and conditions of the
award; and
``(II) the resolution of controversies arising from the
performance of the contract prior to such contract performance
controversies becoming formal contract disputes within the
meaning of the Contract Disputes Act of 1978.
``(iii) In the event of an adverse decision by an agency regarding
a contracting opportunity, the Administrator may--
``(I) not later than 5 days after receiving notice of such
adverse decision, file a notice of intent to appeal with the
head of the agency; and
``(II) not later than 15 days after receiving such notice,
file an appeal with the head of the agency requesting
reconsideration of the adverse decision.
``(iv) Upon receipt of the notice of intent to file an appeal under
clause (iii)(I), further action regarding award of the contract shall
be suspended, unless the head of the agency makes a written
determination, supported by specific findings, that urgent and
compelling circumstances that significantly affect the interests of the
United States will not permit reconsideration of the adverse decision.
``(v) If the head of the agency sustains the adverse decision upon
reconsideration, the decision by the head of the agency shall be in
writing and shall be supported by specific findings.
``(vi) An adverse decision regarding the responsibility of a
Program Participant in competitive awards under this subsection shall
be decided pursuant to subsection (b)(7).
``(vii) For the purposes of this subparagraph, an adverse decision
by a contracting officer includes--
``(I) failing to respond, within 15 days or such additional
time as may be agreed to by the Administration, to a request
from the Administration to make a specific contracting
opportunity available for award pursuant to this subsection;
``(II) declining to make available for award under this
subsection a contracting opportunity (or class of contracting
opportunities) or failing to support such a determination with
specific findings; and
``(III) failing to reach agreement with the Program
Participant with respect to the terms and conditions of a
contract selected for award under this subsection.
``(D) A contract opportunity offered for award pursuant to this
subsection may be awarded as a sole-source contract if the anticipated
award price of the contract (including options) will not exceed
$10,000,000 in the case of a contract opportunity assigned a standard
industrial classification code for manufacturing and $7,000,000
(including options) in the case of all other contract opportunities.''.
SEC. 202. COMPETITION REQUIREMENTS.
Section 8(a)(1)(D) of the Small Business Act (15 U.S.C.
637(a)(1)(D)) is amended--
(1) by redesignating clause (ii) as clause (iii); and
(2) by inserting after clause (i) the following new clause:
``(ii) Whenever a requirements-type contract (including a task
order contract, indefinite quantity contract, or indefinite delivery
contract) is to be awarded, the thresholds for competition required
under clause (i)(II) shall be calculated on the basis of the estimated
total value of the contract.''.
SEC. 203. TIMELY DETERMINATION OF ELIGIBILITY FOR CONTRACT AWARD.
(a) In General.--Section 8(a)(16) of the Small Business Act (15
U.S.C. 637(a)(16)) is amended--
(1) by redesignating subparagraph (B) as subparagraph (E);
and
(2) by striking subparagraph (A) and inserting the
following:
``(A) Upon receipt of notification that a Federal agency intends to
consider a Program Participant for award of a contract pursuant to this
subsection (on a competitive or noncompetitive basis), the
Administration shall promptly notify the agency regarding the
eligibility of the Program Participant for award of the contract, and
shall identify all matters that could reasonably be expected to render
the Program Participant ineligible at the time of the contract award.
``(B) A Program Participant may be found to be ineligible for award
of the contract pursuant to this subsection, if--
``(i) the Program Participant is not in compliance with its
competitive business activity targets established pursuant to
section 7(j)(10)(I); or
``(ii) the Program Participant has failed to make the
submissions required under paragraph (6)(B).
``(C) A small business concern owned and controlled by socially and
economically disadvantaged individuals that has completed its Program
Participation term pursuant to section 7(j)(15) shall be eligible for
award if--
``(i) a requirement has been offered to and accepted by the
Administration for the Program; and
``(ii)(I) in the case of a contract to be competitively
awarded, the prospective contract recipient was a Program
Participant eligible for award of the contract on the date
specified for receipt of offers, and such firm had timely
submitted an offer (including price); or
``(II) in the case of a contract to be noncompetitively
awarded, the prospective contract recipient was a Program
Participant eligible for award of the contract on the date
specified by the agency contracting officer for the submission
of an offer (including price).
``(D) If the Administration determines that a Program Participant
is ineligible for consideration for award of a contract under
subparagraph (B) or (C), the determination shall be supported by
specific findings. The determination (and supporting findings) shall be
furnished to the Program Participant and to the contracting officer for
the agency providing the contracting opportunity.''.
(b) Conforming Amendments.--Section 8(a) of the Small Business Act
(15 U.S.C. 637(a)) is amended--
(1) in paragraph (3)--
(A) by striking subparagraph (A) and inserting the
following:
``(A) [Reserved].''; and
(B) by striking subparagraph (D) and inserting the
following:
``(D) Subsequent to the award of a contract under this subsection,
if requested by the recipient of the contract, the Administration shall
not publicly disclose the agency's estimate of the fair market
price.'';
(2) in paragraph (7), by striking subparagraph (A) and
inserting the following:
``(A) [Reserved].'';
(3) in paragraph (12)(A), by striking ``eligible to receive
subcontracts'' and inserting ``eligible for contract awards'';
and
(4) in paragraph (9)(B)--
(A) in clause (iii), by striking ``and'';
(B) by redesignating clause (iv) as clause (v); and
(C) by inserting after clause (iii) the following
new clause:
``(iv) a determination of ineligibility for award of a
contract pursuant to paragraph (16)(B); and''.
SEC. 204. CONTINUED CONTRACT PERFORMANCE.
Section 8(a)(21) of the Small Business Act (15 U.S.C. 637(a)(21))
is amended--
(1) in subparagraph (B), by striking ``The Administrator
may, on a nondelegable basis, waive the requirements of
subparagraph (A) only if one of the following conditions
exist:'' and inserting ``The requirements of subparagraph (A)
may be waived under any of the following circumstances:''; and
(2) by striking subparagraph (C) and inserting the
following:
``(C)(i) Except as provided in clause (ii), a request for a waiver
pursuant to subparagraph (B) shall be submitted prior to the actual
relinquishment of ownership or control.
``(ii) Under the circumstances described in subparagraph (B)(iii),
the waiver request shall be made as soon as practicable after the
incapacity or death occurs.''.
SEC. 205. TRANSITION COMPETITIONS FOR PROGRAM GRADUATES.
Section 8(a) of the Small Business Act (15 U.S.C. 637(a)) is
amended by adding at the end the following new paragraph:
``(22)(A) A small business concern owned and controlled by socially
and economically disadvantaged individuals, which has graduated from
the Minority Enterprise Development Program, may participate in the
competition for a contracting opportunity to be awarded pursuant to
this subsection if--
``(i) the firm is currently performing satisfactorily a
contract to furnish the same (or substantially similar)
products or services under a contract competitively awarded
pursuant to paragraph (1);
``(ii) closing date for receipt of proposals for the
contracting opportunity is a date after the date on which the
firm will no longer be eligible for award of contracts pursuant
to paragraph (1);
``(iii) the firm is otherwise eligible to compete for the
contract;
``(iv) the Associate Administrator for Minority Enterprise
Development grants the firm's request to participate in the
competition otherwise restricted to Program Participants after
making a determination that denial of the firm's request would
deprive such firm of 25 percent or more of its revenue; and
``(v) the firm was a Program Participant on September 30,
1994.
``(B) A Program Graduate described in subparagraph (A) shall be
ineligible for award of a contract resulting from a competition
conducted pursuant to paragraph (1), unless such firm furnishes (and
the contracting officer accepts) a plan to subcontract not less than 40
percent of the award value of the contract to one or more Program
Participants (of which 20 percent shall be awarded to one or more
Program Participants who are emerging small business concerns, unless
such awards are impracticable after consultation with the Associate
Administrator for the Minority Enterprise Development Program).
``(C) This subparagraph shall take effect on October 1, 1994, and
shall remain in effect until September 30, 1997.''.
SEC. 206. PROCUREMENT PROCEDURES.
Section 8(c) of the Small Business Act (15 U.S.C. 637(c)) is
amended to read as follows:
``(c) Procurement Procedures.--
``(1) In general.--For the purpose of attaining an agency's
goal for the participation of small business concerns owned and
controlled by socially and economically disadvantaged
individuals pursuant to section 15(g)(1), the head of a
participating executive agency may enter into contracts using--
``(A) less than full and open competition, by
restricting the competition for such awards to small
business concerns owned and controlled by socially and
economically disadvantaged individuals as defined in
subsection (d)(3)(C); and
``(B) a price evaluation preference, of not to
exceed 10 percent, when evaluating an offer received
from such a small business concern as the result of an
unrestricted solicitation.
``(2) Definition.--For the purposes of this subsection, the
term `participating executive agency' means a Federal agency,
as defined in section 3(b), in the executive branch of the
Federal Government, other than the Department of Defense.''.
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